According to a recent study conducted by the Canada Mortgage and Housing Corporation (CMHC), young households who leave Montreal to buy a single-family home in the suburbs tend to save more money.
Moving away to buy
This has become more and more common in recent years. Households wanting to buy a home are moving away due to rising prices in urban centres. In the CMHC study, we discover that it is beneficial for households to leave the city to buy in the suburbs.
Generally, a comparable dwelling will be cheaper in the suburbs than in the city. The analysis focuses on households aged 25 to 44 who purchased a single-family home in 2016. This age group and this type of housing are at the heart of the migration movement observed among Montreal households each year. Here are some interesting facts:
- Every year, thousands of Montreal households move to the suburbs to buy a single-family home. Some of these households continue to work in the sector they used to live in. As a result, the cost and duration of their trips increases.
- The savings on the cost of acquiring a single-family home vary according to the sector. Households who moved from the city of Montreal to the North Shore saved $650 per month.
- It is on the North Shore that people save less on mortgage payments because of the transportation costs. Despite this fact, the move was worth the cost for the Montreal households who bought a home there. Their monthly savings, around $650, dropped to about $380 after adding transportation costs. For movements within the suburbs, the results are more mixed.
- Single-family homes purchased in the suburbs or even further from the metropolis were often large and recent.
- Does the increased time spent travelling to work offset the savings on mortgage payments? It all depends on the value placed on that time by city dwellers who have become new residents of the suburbs. Let us take for example the people who left Montreal for Laval or the North Shore. Their trip is no longer worth it if the increased time is worth around $37 an hour. By comparison, the average hourly wage in the Montréal metropolitan area was between $23 and $28 in 2016.
The number of urban households leaving the city could increase if single-family home prices continue to rise faster on the island of Montréal than in the suburbs. This migration could even become even more beneficial if public transport and teleworking technologies continue to improve.